MANCHESTER, New Hampshire (CNN) --Democratic presidential contender Wesley Clark on Monday unveiled a sweeping tax plan that he said would benefit 31 million families without increasing the federal budget deficit.

During a speech in Nashua, New Hampshire, Clark said that under his proposal, called "Families First Tax Reform," families of four making less than $50,000 would pay no federal income tax and all families with children making under $100,000 would get a tax cut.

Under the current tax code, a family of four making $50,000 pays $1,583 in federal income taxes.

"Right now, the sad fact is that too many Americans are working harder and harder and earning less and less. Under George W. Bush, the typical working family has seen its income fall by nearly $1,500 annually," Clark told the Nashua Community Action Association. "As incomes have fallen, expenses have gone up -- way up."

The tax cuts would be paid for by closing corporate tax loopholes and by increasing by 5 percent points the tax rate on income exceeding $1 million, Clark said. Revenue from the increase could not be used for new spending.

Clark said President Bush's tax cuts have disproportionately helped the rich.

"This year alone, the richest Americans -- those making more than $1 million -- are getting an average tax break of $128,000," Clark said. "So, while working families have seen their bank accounts shrink, the president has been working overtime to help the richest Americans get richer. That's not right."

The higher tax rate would not be imposed on capital gains, or on the first $1 million in income, and would affect only the top one-tenth of one percent of taxpayers, according to the plan.

Clark issued a challenge to Republicans who might want to accuse him of class warfare.

"If [Republican strategist] Karl Rove is watching today, Karl, I want you to hear me loud and clear: I am going to provide tax cuts to ease the burdens for 31 million American families -- and lift hundreds of thousands of children out of poverty -- by raising the taxes on 0.1 percent of families -- those who make more than $1,000,000 a year. You don't have to read my lips, I'm saying it," Clark said.

"And if that makes me an 'old-style' Democrat, then I accept that label with pride and I dare you to come after me for it."

Under his plan, fewer than half of families would have to file tax forms and the rest would find their taxes easier to file than they are now, Clark said.

"With this new system, you can figure out whether or not you need to pay taxes just by filling out three lines. The first line is your income. The second line is your marital status. The third line is the number of children you have," Clark said.

"And if it all adds up to $50,000 or less and two children or more, then you should put away your checkbook, because you won't owe the government a dime in income taxes."

The plan would combine several tax benefits for children into one $2,250 credit per child under 17.